This site is part of the Informa Connect Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them. Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 3099067.

Penetrating insights and the right connections

Future finance: balancing FinTechs and regulations from a regulator’s perspective

Share this article

Abu Dhabi Global Market (ADGM) is the world’s newest and most progressive international finance centre comprises of an international Financial Services Regulator, a Registration Authority and a fully digital ADGM Courts overseeing the designated financial free zone in Abu Dhabi. ADGM’s remit covers the whole non-financial and financial sectors including banking, insurance investments, funds, securities/derivatives, commodities, aviation financing, corporate and legal services, hospitality FinTech and more. This reach enables ADGM to have a holistic overview of the marketplace and a strategic advantage in providing an attractive business and financial ecosystem that caters to multiple industries and markets.

In the two years since ADGM was set up, it has gained industry recognition as one of the leading and most innovative financial centres in the Middle East and North African (MENA) region with high regulatory standards and a market-friendly approach. It is known as an open centre for advocating innovation and nurturing entrepreneurship. ADGM establishes its brand and position as an innovative financial centre, the preferred business-friendly regulator, and the global FinTech hub in MENA at the beginning of its inception.

The role of financial regulators and international financial centres is to support economic growth, provide financial stability, instil market confidence, and maintain trust and integrity to enable a robust environment for financial services to be conducted.

At ADGM, we go beyond rules and regulations.

ADGM’s financial and tech focus is strategic and necessary because we want to play a role in supporting a fast-evolving and unstoppable financial transformation in the MENA region. In today’s current state of affair. some 86 per cent of the adult population in the MENA region remains unbanked; local small and medium sized enterprises (SMEs) are a much underserved market receiving 50 per cent less bank lending than the middle income countries’ average. Those are huge funding gaps that FinTechs can help plug.

A sound and robust financial services sector is not only an engine of growth, but supports growth more widely among the different sectors of the real economy. It brings about efficient allocation of capital, spreads risk, and enables innovation to support consumption, growth, and production in the real economy. We believe today’s regulators should provide a supportive environment for innovators to contribute meaningfully when financial markets are undergoing huge technological change.

In November 2016, ADGM launched the region’s first FinTech regulatory framework to license FinTech stakeholders and the first dedicated Regulatory Laboratory (Reglab) – a regulatory sandbox - for FinTech innovators to develop and test their products and services in a controlled and supportive environment. Soon, the ADGM Innovation Centre will also be available for the FinTech communities, a place where they can gather and create an interactive, collaborative and vibrant ecosystem for innovation to take root in Abu Dhabi and the region.

More recently, KPMG announced its plans to set up its Digital Village – its signature innovation platform – in ADGM as their first presence outside of Singapore. The KPMG Digital Village is designed to match, foster and forge innovation ventures between companies and start-ups. The platform intends to help start-ups as they look to grow to the next stage and equip corporate clients with one of the latest innovation technology.

The ADGM RegLab is one of the most active global FinTech programmes in the world. Close to 20 international firms cover a wide range of financial verticals including data analytics for credit assessments and biometrics to promote financial inclusion among the SMEs and unbanked, RegTech such as AI-enabled compliance monitoring, blockchain-enabled payments, ICO-based funding platforms and robo-advisory.

In building out the FinTech ecosystem, we also work closely with key stakeholders such global regulators, financial institutions and industry partners to address the needs of the sector. For example, we have just launched an electronic know-your-customer (e-KYC) project, working with some of the biggest local financial institutions to develop a proof of concept to determine the governance framework and function requirements of an e-KYC, with the aim of helping reduce a costly burden for banks.

As part of its collaboration push, ADGM has established more than 10 ‘FinTech bridges’ globally, in countries such as Singapore, Japan, France, Australia. The aim of the bridges is to allow the FinTech innovators greater access to capital, the market place and regulatory recognition. They act as the regulator’s way of support, as a lack of market participation will always be one of the biggest challenges in the FinTech space.

Our commitment and efforts in transforming and accelerating the financial landscape in the MENA region have gained industry support and endorsements. Recently, ADGM was accorded Global Investor’s Financial Centre of the Year (MENA) for the second consecutive year; and in early 2017, Abu Dhabi and ADGM were named the top FinTech hub for the MENA region by both Deloitte and the Global Fintech Hubs Federation.

New financial technologies will continue to be the new ‘norm’, offering new opportunities but also creating new risks. Financial regulators will need to balance their traditional regulatory objectives of financial stability and consumer protection with the objectives of growth and innovation.

However, the journey has only just begun. ADGM will continue to introduce more innovative initiatives and work with partners to serve the evolving needs of the financial industry, as well as, support the development and growth of the FinTech community in Abu Dhabi and regionally. The best is yet to come.

Share this article

Sign up for Wealth & Investment Management email updates

Upcoming event

WealthManagement EDGE

21 - 24 May 2023, Hollywood, Florida
Get your EDGE: power your growth, productivity and investments
Go to site